Row over £3.5m council windfall

Councillors squabbled over which party would spend a £3.5 million VAT windfall most sensibly.

The Tories said they would hang on to it to help keep down or even freeze council tax next year.

The Labour Party and Lib Dems wanted to keep it to “minimise the need to increase council tax next year” but they also wanted to be free to spend some of it this year on “unavoidable pressures to safeguard children and provide service to elderly people and other vulnerable adults”.

The VAT cash windfall of £3.5 million came from claiming back VAT paid out by the council right back to the 1970s following a court case in 2006 which ruled Customs and Excise had been wrong to demand tax on things like parking charge notices and fines.

At the council cabinet meeting last Tuesday the Tories’ financial tzar Councillor David Stevens proposed keeping all the cash in the council balances to keep down council tax next year.

But leader of the council Cllr Jo Lovelock said it was “simplistic to suppose you can simply magic away budget pressures”.

Reading borough councillors had previously been told there was a potential budget overspend this year of almost £2 million overall for safeguarding children and community care.

Cllr Stevens suggested the VAT payback could create “a council tax freeze” next year and accused the Labour Party of lack of “budgetary discipline” for proposing to use a one-off windfall to prop up overspending.

Tory councillor Tom Stanway accused the Labour Party of wanting to “spend, spend, spend, like there is no tomorrow”.

But Labour councillor Mike Orton said the Conservatives would cut services to the most vulnerable children and elderly and disabled people.

He said: “It is very, very simple, the Conservatives would cut the budget.”

Lib Dem councillor Warren Swaine said of the Labour Party: “We would have very big concerns if this money was used as a blank cheque to bail them out of any budget they got themselves into.”

But he said it was important to ensure the budget was there “for people who needed to be protected”.

In the end, the Liberal Democrats voted with the Labour Party and the council agreed to use the money to cover unavoidable overspending this year to safeguard children and provide services to elderly and other vulnerable adults while still hoping to use it to keep down council tax next year.